Buckle Up…

Good morning,

Well, the fear of Trump leaving the Iran deal and issuing sanctions became a reality this Tuesday. The fear of crude supply constraint, further Middle East tensions between Iran, Israel, and Saudi Arabia, and a potential for future war sent crude oil and refined product prices through the roof. Many analysts believe we might have at least $3-7/barrel more to go which would well push our retail price of gasoline over $3/gallon. I wish I had some good news to share or some optimism in regards to the coming weeks, but I do not. Expect prices to increase from where they are at until at least the OPEC meeting in the middle of June. By the time OPEC meets, we should have some understanding on the upcoming sanctions and their potential affects on the markets. For now, get ready to spend a lot more money at the pump for the summer.

Retail prices of gasoline and diesel continue to rise. I expect to see gasoline prices near $3/gallon in the coming weeks and the potential for diesel fuel to approach $3.50/gallon. These prices come at the biggest demand season in our country for farming and travel.

Propane prices have surprisingly stayed calm during this storm. Prices have gone up, but not at the same percentage as gasoline or diesel. I do believe that our current retail pricing is probably going to be close to summer fill prices, and next season’s contracts will be about 15 cents/gallon more than last year. Considering that crude and refined product prices have gone up 47% in price compared to last year, the increase in propane seasonal contract price is potentially only 13%. Therefore, propane heating contracts are offering good value in comparison to other refined products. Contract prices will be released in June or early July.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

Best regards,

Jon Crawford – Pres.

Waiting Game

Good morning,

The crude markets are now in a “wait and see” pattern. Little bits of info here and there are moving WTI prices above and below $67/barrel with no clear direction until Trump makes up his mind on the Iran nuclear deal. Missiles in Syria again, as well as small attacks in Saudi Arabia caused a small uptick price, but then the continued increase in U.S. production put the brakes on the rally. We are seeing the highest prices at the pump prior to the last crude oil market collapse in 2014. Therefore, we are going to need a major event to take us higher, but any jitters to cause selling could move WTI prices down over $5/barrel. The market is so fragile right now and rattling with anticipation looking towards the middle of May. So for now, it’s a waiting game and we are all going to pay more at the pump in the meantime.

Retail gasoline prices are approaching $2.70/gallon and diesel prices are around $3.09/gallon. I expect to see these prices continue for at least two to three weeks.

Propane has been unable to really build any inventory due to the cold April. Therefore prices are not dropping as much as expected with the warmer weather on the way. In addition to the lack of building inventory, exports continue to be healthy. Comparing current propane prices to crude prices past, propane currently has good value. Therefore, I don’t think that summer fill prices will be much lower than today’s retail price unless we see WTI crude prices collapse back down to near $60/barrel. Summer fills and next season’s contracts will be released in a couple months. Stay tuned for more info.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

Best regards,

Jon Crawford – Pres.
Crawford Oil and Propane